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Sustainable Growth Rate: Between Fixed Asset Growth and Firm Value

Author

Listed:
  • Nur LISTIANI

    (Universitas Kristen Satya Wacana, Salatiga, Indonesia)

  • Supramono SUPRAMONO

    (Universitas Kristem Satya Wacana, Salatiga, Indonesia)

Abstract

This study seeks to test the effect of fixed asset growth on sustainable growth rate and the role of sustainable growth rate in mediating the impact of fixed asset growth rate on firm value. This study involves 134 Indonesian manufacturing firms in 2013-2018. We analyze the data by using the panel data regression with both the fixed and random effect models. The results demonstrate that fixed asset growth positively affects sustainable growth rate. Besides, the findings show the positive impact of sustainable growth rate on firm value and that sustainable growth rate strengthens the impact of fixed asset growth on firm value. This study contributes to extend the previous literature on sustainable growth rates. In addition, it has several implications that are relevant for firm managers and investors relating to the relationship between sustainable growth and asset investment and firm value. However, this study is subject to several caveats that need to be emphasized by future studies.

Suggested Citation

  • Nur LISTIANI & Supramono SUPRAMONO, 2020. "Sustainable Growth Rate: Between Fixed Asset Growth and Firm Value," Management and Economics Review, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 5(1), pages 147-159, June.
    • Handle: RePEc:rom:merase:v:5:y:2020:i:1:p:147-159
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    References listed on IDEAS

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    Cited by:

    1. Naumoski Aleksandar, 2022. "Financial Policy and Companies’ Sustainable Growth," Economic Themes, Sciendo, vol. 60(3), pages 281-301, September.
    2. Ardi Ahmeti & Skender Ahmeti & Alban Elshani, 2025. "Analysis of Sustainable Growth Rate in Manufacturing and Construction Firms: Evidence from Selected Western Balkan Countries," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 1, pages 244-261, March.
    3. Mongkhol Moolkham, 2024. "The impact of sustainable development on the relevance of accounting information and financial activities: Evidence from Thailand," PLOS ONE, Public Library of Science, vol. 19(11), pages 1-23, November.
    4. Bojana Vuković & Teodora Tica & Dejan Jakšić, 2022. "Sustainable Growth Rate Analysis in Eastern European Companies," Sustainability, MDPI, vol. 14(17), pages 1-21, August.

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    More about this item

    Keywords

    firm value; fixed asset growth; pecking order theory; sustainable growth rate.;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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